Departing Hodnett gets to keep Absa shares
David Hodnett, who until May 15 last year was deputy chief executive officer of Absa Group, was paid by the bank until the end of his notice period on February 28, 2019.
This is not atypical, neither is the fact that he was required to work a handover period prior to his notice period.
However, Hodnett was also awarded “eligible leaver treatment on all unvested short- and long-term incentive rewards”, which is not always guaranteed when an executive departs – particularly when they resign. He retains all long-term incentives, except for those made under the 2017 restricted share award.
He resigned from the group, with immediate effect, on the day of its annual general meeting (AGM) last year, a departure the bank in its 2018 Remuneration Report now terms a “mutual separation agreement”.
Under the agreement, he served a handover period until August 31, 2018, during which he had to “be available to the group”. Thereafter, he served a notice period, as “gardening leave”, until February 28, 2019. During this time, he received fixed remuneration, likely at the same level he had been at until his resignation in 2018. This comprises both cost-to-company and role-based pay.
Until May 15, 2018, Hodnett was paid fixed remuneration of R6.376 million. This included a leave payout of R1.88 million in April 2018. He (obviously) did not receive any short-term incentives during 2018 and was not eligible for any long-term awards in the year.
2018 |
2017 |
|
Salary |
R2 481 271 |
R6 656 796 |
Medical aid |
R55 658 |
R136 980 |
Pension |
R66 993 |
R175 000 |
Other employee benefits |
R1 904 475 |
R40 536 |
Role-based pay |
R1 868 280 |
R5 000 000 |
Total fixed remuneration |
R6 376 677 |
R12 009 312 |
Based on the pro-rata amounts (salary and role-based pay), it is likely that Hodnett received in excess of R4 million in fixed remuneration during his notice period (gardening leave). The payment of role-based pay during a notice period or gardening leave was discontinued in October 2018. This excludes his pay during the handover to end-August. Hodnett was also paid accrued leave up to February 28.
Under the “eligible leaver treatment” on long-term incentives, the shares awarded to him “remain subject to the rules of the respective plans until their normal vesting date, including provisions as to malus and clawback. Long-term incentive awards and restricted shares will be subject to the outcomes of the relevant performance conditions”.
His total number of shares under award is 307 731. At the current share price (around R164), this is valued at R50.5 million.
Number of shares under award at December 31 |
Last scheduled 2018 vesting date |
|
Share Value Plan 2015 – 2017 |
14 274 |
Sep 1, 2018 |
Share Value Plan 2016 – 2018 |
35 624 |
Sep 1, 2019 |
Share Value Plan 2017 – 2019 |
27 547 |
Sept 1, 2022 |
Share Value Plan 2018 – 2020 |
22 062 |
Sep 1, 2023 |
Non-deferred share award 2018 |
14 708 |
March 1, 2019 |
Restricted award – Share Value Plan 2016 |
48 379 |
March 30, 2022 |
Restricted award – Share Value Plan 2017 |
Will lapse in 2019 |
|
Long-term incentive award 2017 |
145 137 |
July 31, 2020 |
In January 2018 Hodnett received a long service award (for 10 years’ at the bank) of a rather bizarre R5 000. In the (terse) announcement of his resignation, Absa thanked him for his “extensive contribution”, “including as chief risk officer and financial director, and most recently as head of the South Africa banking portfolio”.
During an executive reorganisation in early 2018, Hodnett was offered the job of CEO of the group’s corporate and investment banking unit. He would have surely seen this as a demotion and turned it down. With no obvious future role, he took a two-month sabbatical in April before announcing his resignation halfway through.
Hodnett joined Standard Bank Group as chief risk officer with effect from yesterday (May 1). His appointment was announced in March and he served as chief risk officer designate from March 25. He replaces Neil Surgey who had been at the bank for 17 years. Prior to joining Absa in 2008, Hodnett had been at Standard Bank.
Details of the remuneration and outstanding share awards of departing CEO Maria Ramos, who left the group on February 28, will be published in the group’s integrated report next April.
Hilton Tarrant works at YFM. He can still be contacted at [email protected].
Source: moneyweb.co.za